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CPA Mobility

Freedom of Choice is Good for Businesses and Consumers

(Editor’s note: Advocates for licensing reform approached two
state attorneys general for their bipartisan perspective on the
mobility issue.)

In an increasingly global economy, business no longer stops at
national borders much less at state lines. With advancements in
technology, even relatively small companies have little difficulty
extending operations across the nation. All businesses— big and
small—need the services of certified public accountants. But should
CPAs’ ability to provide services to their customers end at the state
line? We think not.

As more businesses expand their operations into multiple states, it
is increasingly vital to the efficiency of those companies that their
CPAs have the ability to cross the same state lines to provide
highquality services. Virginia and Rhode Island have been leaders in
taking a regulatory approach that allows licensed, out-of-state CPAs
to enter our states freely to provide services. At the same time,
regulators have important new tools for tough disciplinary action
against CPAs who violate the rules. We believe that all states should
embrace such a regulatory policy, which is good for consumers and is
simple to put in place.

For more than a decade, the AICPA and the National Association of
State Boards of Accountancy (NASBA) have worked to create and refine a
model statute, called the Uniform Accountancy Act (UAA), that
establishes a comprehensive national regulatory framework.

Although the UAA covers all aspects of the regulation of accountancy
in a state, one key innovation has been the concept of “substantial
equivalency.” A state that adopts substantial equivalency recognizes
that an out-of-state CPA can practice in the state if he or she comes
from a state with CPA licensure requirements that are substantially
equivalent to the rigorous education, experience and examination
requirements in the UAA (or individually meets those requirements).

Adopting substantial equivalency will permit all CPAs from
substantially equivalent states, and an individual CPA from any state
who demonstrates the same level of personal qualifications, to
practice within its borders. Broad adoption of substantial equivalency
ensures that consumers can retain the CPA of their choice; allows CPAs
to respond to the needs of consumers who transact business in multiple
states; and frees regulators to focus on other enforcement priorities.

Over time, however, the effort by the AICPA and NASBA to promote
mobility through substantial equivalency policies has become
compromised by burdensome notification rules—requiring out-of-state
CPAs to complete lengthy forms or seek official approval prior to
entering a state to provide accounting services. In many states, CPAs
who provide necessary services for companies with operations in
multiple states are forced to wait for forms to be processed. These
arcane notification rules do not assist businesses or consumers in
search of the best available professional services from CPAs.

Recognizing that the benefits of substantial equivalency had been
undercut by patchwork notice requirements, the AICPA and NASBA
developed amendments to the UAA that eliminate these outdated
notification requirements for CPAs who wish to provide certain
accounting services. Arizona, Colorado, Connecticut, Delaware, Idaho,
Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland,
Michigan, Minnesota, Mississippi, Missouri, New Jersey, New Mexico,
Ohio, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia,
Washington, West Virginia and Wisconsin have already adopted a uniform
change to their law. Additionally, Georgia, Oklahoma and Pennsylvania
have enacted legislation that provides for mobility practice
privileges for CPAs from states that have passed mobility. At least 15
states have indicated that they will consider mobility legislation in
the 2009–2010 sessions.

Regulators’ ability to discipline out-of-state CPAs is not dependent
on notification, and eliminating the notice requirement will not harm
states’ ability to oversee out-of-state CPAs practicing within their
borders. The amended UAA provides that individual CPAs licensed in one
state who enter another state to practice pursuant to the substantial
equivalency practice privilege automatically consent to the
disciplinary authority of the second state’s accountancy board and to
comply with that state’s accounting statutes and board regulations. If
an out-of-state accountant must be disciplined by regulators or the
courts, the amended UAA has given the states expansive disciplinary
authority—and guaranteed jurisdiction to exercise it. This automatic
jurisdiction over out-of-state CPAs the UAA provides is bolstered by
the fact that state courts have traditionally exercised jurisdiction
over professionals, including attorneys, who enjoy the privilege of
practicing within the state. State courts that have considered the
question have regarded jurisdiction over out-of-state accountants the
same way. Our offices will work with the proper authorities to pursue
any person who enters our state and violates the law, and eliminating
a notice requirement that generates needless paperwork will not impact
our ability to protect consumers.

We also believe that eliminating the notification requirement would
increase regulators’ ability to enforce high standards for the
practice of accounting and thereby protect the public. Currently,
regulators are forced to process the notifications submitted by
out-of-state CPAs, shifting time and resources away from enforcement
and oversight, and focusing on the essentially bureaucratic task of
administering notification systems. Less time spent on paper-pushing
means more time devoted to actually protecting the public.

Therefore, the amended UAA simultaneously helps consumers by
eliminating barriers to the free choice of accounting professionals,
while also offering regulators a powerful tool to oversee the practice
of accounting in their state. CPAs’ clients will no longer be limited
by varied state licensing and notification regimes, and state
regulators will be sure that they possess jurisdiction and
disciplinary authority over out-of-state CPAs. In the fast-moving and
diverse modern economy, we believe that implementing a regulatory
approach that allows freedom of choice in accountants—and is coupled
with tough oversight by state accountancy boards—is the best choice
for everyone.

Patrick C. Lynch is attorney general of Rhode
Island, and Bob McDonnell is attorney general of Virginia.

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